What nonprofits should know about charitable gambling for fundraising

Nonprofits using charitable gambling events for fundraising need to be aware of legal issues.
Date Published
05/14/2014

Donor management professionals are constantly looking for new fundraising strategies that are both engaging and effective. One potential route that nonprofit organizations have taken is using charitable gambling to introduce donors to a cause or campaign. Instead of an event, such as a race or walk, this type of fundraiser gives people the opportunity to play a number of games of chance and skill that funnel all winnings toward a charity or nonprofit group.

In doing so, nonprofits can better utilize some of the more competitive tendencies that donors may have and motivate them to raise as much money as possible. As more philanthropic groups implement this tactic for fundraising, they also need to be aware of the legal issues that influence holding a charitable gambling event.

Online gaming
The Chronicle of Philanthropy recently wrote about the organization Spin for Good, which provides an online platform for games, including blackjack and slots. Nonprofits are free to participate in the online gambling event. However, donors are asked to pay a small amount of money to enter – this could range from $1 to $5. The person who founded Spin for Good, Amee Kamdar, is also the co-author of the best-selling book “Freakanomics.” The writer and consultant for Greatest Good explained the online platform was created to challenge all other social network-enabled games, but with the main caveat being that people would be playing with real money and for charity. Through the end of April 2014, roughly 1,000 online gamers have raised about $3,000 for participating charities.

Follow state and local laws
At the same time, there are legal issues involved in using online gaming as a fundraising event that nonprofit organizations need to understand. For instance, Los Angeles-based Public Counsel Law Center explained California has specific rules that charitable groups need to abide by to be eligible to hold gambling fundraising events. Any group using a poker night to generate donations, for example, must register with the California Attorney General’s Bureau of Gambling Control. What’s more, nonprofits must operate for at least three years before they become eligible to hold this kind of event, and it can’t run for more than five hours, explained the PCLC.

Accordingly, nonprofit groups must plan ahead before fundraising this way. Without following the laws in their state, charitable organizations may be held accountable for violating regulations, costing them more than they expected.

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